This decision will ensure the continued processing of claims from thousands of providers who would likely be unable to meet the deadline and would therefore have had their Medicare claims rejected, CMS said.

"Implementing this contingency plan moves us toward the dual goals of achieving HIPAA compliance while not disrupting providers' cash flow and operations, so that beneficiaries can continue to get the health care services they need," said CMS Administrator Tom Scully in a statement.

CMS will continue to "regularly reassess" the readiness of its trading partners and determine how long this contingency plan will remain in effect. When CMS reassesses the plan will depend on what happens after Oct. 16, a CMS spokesperson said. The agency also encouraged other plans to assess the readiness of their trading partners and implement contingency plans as appropriate.

The agency's decision to accept noncompliant claims will incline other health plans to follow suit, said David A. Feinberg, a HIPAA consultant who has been advising physicians and health plans that they can continue to use their legacy systems as long as they continue to diligently execute their plans to transition to HIPAA. Indeed, all 42 Blue Cross Blue Shield health plans announced that they will continue to accept noncompliant electronic claims after Oct. 16. Each plan will determine how long to continue this contingency plan based on the "unique business environment of its service area."

Mr. Feinberg, president of Rensis Corp. of Seattle, recently presented his "third way" approach at a meeting sponsored by the health care education company Train for HIPAA. …

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